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Point Of View

Instagram Stories

Joshua WIlliams

Background

Last week Instagram introduced Stories, allowing users to share multiple photos and videos together in a slideshow format with their followers. Clearly taking inspiration from others, Instagram CEO Kevin Systrom said that Snapchat “deserve all the credit” for this montage style.

Details and Implications

The Stories feature is integrated directly into user’s newsfeeds, with the stories bar appearing at the top and users can swipe through Stories from people and brands they follow. Instagram has ordered Stories algorithmically using both Instagram and Facebook data to decide whose content users are most likely to interact with. This differs from Snapchat, where stories are ordered in chronological order, meaning the most recent post is the first one you see. The other way to view Stories is by going to a user’s profile and tapping on their profile image – Instagram indicates there is a story available by surrounding the profile picture with a coloured ring.

One of Instagram’s ace cards over Snapchat is the open network it has developed. It’s easier to find, follow and connect with people on the platform. This means the new feature is immediately open to a bigger network; 300 million daily users on Instagram, compared to Snapchat’s 150 million.

As with Snapchat, Instagram users have the option to use a variety of creative filters, text and emojis. Snapchat still has the edge however with the inclusion of its Lenses (which you can use in the App to augment people’s faces), but with Facebook recently buying MSQRD (a company that specialises in augmented reality) and the testing of Selfie Filters on the Facebook platform, it is likely only a matter of time until Instagram rolls out a Lenses-type offering too.

As for Stories, Nike generated 800k views in 24 hours with an Instagram Story the day the feature launched. On the same day on Snapchat, Nike’s best video saw only 66k views. General Electric, Mountain Dew and E! have all also tested the new format this week, as have alcohol brands such as Buchanan’s Whisky, utilizing the ability to restrict the audience to a given age range. Snapchat offers age restriction too, but only on ads.

Instagram hasn’t rolled out an ad solution for Stories yet, but when it does advertisers will likely have access to the wider Facebook network, meaning richer, cross-platform targeting.

Summary

Along with Facebook’s new Selfie Filters, Twitter Moments and Stickers, this is another indication of the big social players moving towards more fluid storytelling.

Instagram seems to have nailed the first version of the Stories feature with a well thought out UX that integrates smoothly with its users. As the offering develops, potentially covering more Snapchat features and launching ads, it will be interesting to see how brands and users react. For now, we recommend brands experiment with this new feature to find out what type of Stories work for their audience.

Quarterly Earnings Q2 2016

Joshua WIlliams

Background
The Q2 quarterly earnings reports are in. So who’s up, who’s down, and who’s on the acquisition block? Here’s a quick overview of the usual suspects. 

Apple: hardware business, services, iTunes, cash

Apple reported $42.4b in revenue, $7.8b in profit, 40.4m iPhones sold, 9.9m iPads sold, and 4.2m Macs sold. iPhone, iPad, and Mac sales were all down and revenues continue to decline year on year, yet the results boosted Apple’s stock price as the decline was less than expected. Looking ahead, a number of investors are quite bullish still on Apple. Though there is still concern about Apple losing its innovative touch, there are a few bright spots in its pipeline. A lot of that growth will come from the services sector, think iTunes, and less from the hardware business. Tim Cook even forecasted, “the company projects that its services sector will earn as much money as a Fortune 100 company by the end of 2017 (Washington Post, August 1, 2016).” That’s quite an achievement if it gets there next year. And don’t forget, Apple is still sitting on huge pile of cash – $231.5b to be exact.

Alphabet (Google): ad revenues, mobile, AI, “the cloud”

Topping expectations again, Alphabet reported $21.5b in revenue (+19% Y/Y), 89% of which comes from Google advertising revenues. Quite a staggering figure if you consider the number of businesses now incorporated under the Alphabet umbrella. As always, the key metric for investors when reviewing Google’s business is to look at paid clicks and CPC. Paid clicks were up by 23% and CPCs declined by 11%. A lot of that credit goes to mobile. That’s good news for advertisers, especially during the first full quarter where Google removed ads from the right-hand side of the search engine results page. Beyond the advertising revenue though, Google has been busy this quarter with a push forward in AI and already reducing energy consumption from servers by 40%, and it expects that cloud-based services will be the next big boost for the bottom-line.

Facebook: mobile, video, VR

Breaking its own record and reporting the highest-ever quarterly revenue and profit. Facebook reported $6.4b in revenue, $2.1b in profit, and $0.71 earnings per share (+184% over last year). But those figures only begin to tell the story, as the real story comes from the growth in mobile and Facebook’s ability to completely dominate in this space. It reported 84% of revenue coming from mobile, and a growth rate of 22% year on year for mobile MAUs (monthly active users). Facebook’s revenue stream is much like that of Alphabet’s – heavily weighted towards advertising at 97% of total. Yet they expect that VR will begin to make a big uptick in the business and help diversify its revenue a bit. Zuckerberg also pushed hard on a ‘video first’ approach. And in case you missed it this week, Instagram made a huge step forward in that way – launching stories, a quick steal from Snapchat.

Yahoo: Verizon, AOL, original content

Yahoo had another weak quarter, but no one really cared. Just days after reporting results, it was announced that Yahoo had been acquired by Verizon for $4.83b (expected to close in Q1 2017); a steal considering Yahoo was once valued at over $125b. This is big news for Verizon who snapped up AOL last year for a very similar price. Verizon is looking at ways of creating original video content – watch out Netflix and Amazon – and then focus on partnerships through go90.

Twitter: video, viewability, Twixit

“We’re seeing a continuation of the trends discussed last quarter with less overall advertiser demand than expected,” Twitter reported during their earnings call. They are also seeing a continuation of executive departures, now known as ‘Twixit’. Adding to its woes, Twitter continues to struggle with its ad business as pressure on its video pricing accelerates. Twitter recently changed the default setting to 50% in-view for 2-seconds for video ads on the platform, down from 100% for 3-seconds. Yet the biggest piece of bad news for Twitter exists in its slowing user growth – topping out at 3%. While that’s still a sizable audience, increasing pressure from platforms, such as Snapchat and Instagram will prove increasingly challenging to Twitter’s growth and more importantly, its attractiveness to Generation Z. Recently deemed the “Yahoo of social media” by some analysts, Jack Dorsey should expect a phone call from Lowell McAdam’s very soon.

Olympics Rule 40

Joshua WIlliams

Background

Large scale cultural moments don’t come much bigger than the Olympic Games and Rio 2016 (kicking off on 5 August) may prove to be the most watched and talked about Games yet. The scale of interest and real-time nature of the Games present a huge opportunity for brands. However, controversial “Rule 40” may limit athletes, and in turn their commercial partners who aren’t official Olympic sponsors, from truly maximizing that opportunity.

 

Details and Implications

By-law 3 to Rule 40 of the Olympic Charter (commonly referred to as “Rule 40”) states that: “Except as permitted by the IOC Executive Board, no competitor, coach, trainer or official who participates in the Olympic Games may allow his person, name, picture or sports performances to be used for advertising purposes during the Olympic Games.”   

 

So why does the rule exist? And what are the implications?

 

Rule 40 helps to create a window of “exclusivity” for Official Olympic Sponsors (who have paid millions to align themselves with the Games), prevent ambush marketing, and ultimately protect a vital source of revenue.

 

Rule 40 isn’t new and whilst the guidelines supporting the rule have been relaxed slightly in advance of Rio 2016, the rule is continuing to cause controversy due to the restrictions it places on participants to market their own image during the period of the Games (27 July until 24 August) - for some, arguably the most prominent moment and greatest commercial opportunity of their careers.

 

The rule means that personal sponsors of participants who aren’t official Olympic sponsors can’t launch new advertising campaigns or use any terms directly related to (or implying an association with) the Olympic Games alongside the participant’s name or image (e.g. Olympic, Games, “Citius, Altius, Fortius”, medal, Rio etc.).  This means that non-Olympic sponsor brands who have been supporting athletes throughout their long road to the Games won’t, for instance, be allowed to react in social media to their Olympic performances or send them wishes of good luck during the Games period.  

 

Under the new guidelines for 2016, in a slight softening of previous rules, personal sponsors of participants who aren’t official Olympic sponsors can continue to run existing ‘generic’, non-Olympic themed campaigns during the period of the Olympics (subject to approval in advance by the IOC or applicable NOC).

 

In addition, the IOC relies on each National Olympic Committee (NOC) to interpret and enforce the guidelines. This lack of clarity across countries, makes it very difficult for international brands to navigate and means they inevitably have to create multiple versions of a campaign, or design to the lowest common denominator.

 

Summary

There’s a clear rationale behind Rule 40, and the guidelines surrounding the rule have been relaxed slightly - but the controversy has not gone away and many feel that the relaxing of the rules does not go far enough.

The brands (Olympic sponsors, and non-sponsors alike) which will ‘win’ in engaging with fans and capitalising on the opportunity this summer, will be those with a clear plan, a strong brand point of view and a comprehensive understanding of the regulations.   

Spotify Programmatic Offering

Joshua WIlliams

Background

Spotify’s mobile audio ad inventory is now available programmatically through private marketplace (PMP) deals, thanks to partnerships with AppNexus, The Trade Desk, MediaMath and Rubicon.  This allows ad buyers to tap into what they know about users using the same 1st and 3rd party data they use across other platforms in order to serve them messaging in unique audio ad formats versus the usual display and video programmatic formats. This offering is available in all of Spotify’s 59 markets across the globe.

Details and Implications

As the industry (and budget) moves largely towards programmatic buying, publishers have made continued efforts to ensure they do not get left behind. Spotify’s programmatic audio ad products are yet another way to tap into the same data ad buyers use across their campaigns, as well as use client data in order to more efficiently and effectively target users - even across the more unique ad formats. The fact that this offering is only available via Spotify’s mobile platform is telling in terms of where user traffic is expected to grow.

  • The same as with a publisher-direct buy, brands using the programmatic buying method will have 100% SOV during the listening experience, with an audio ad and a companion banner. Audio spots can be 15 or 30 seconds and are non-skippable.
  • Advertisers are able to buy Run of Network PMPs or audience-specific PMPs, depending on the brand’s reach and target goals.
  • Spotify 1st party data is available to utilize, but advertisers are also now able to layer on their own data as well. That data can be used to target Spotify users via mobile ad device ID matching.
  • PMP targeting packages include: run of site, first-party registered demo, real-time playlist targeting, and real-time genre targeting.  Language targeting is also available.

iHeartMedia and Soundcloud are the only other partners in the music streaming space offering audio inventory programmatically, so the addition of Spotify allows advertisers to further scale any audio creative they may have or provide stronger support for creating audio ads. Note that Spotify does have display and video programmatic offerings as well.

Summary

Spotify’s programmatic audio ad offering allows advertisers the opportunity to reach consumers in an ideal high impact and low clutter environment. As the digital media industry continues to move towards programmatic buying, advertisers and media buyers should be on the lookout for the more unique offerings becoming available programmatically.

Yahoo Acquisition

Joshua WIlliams

 

INTRODUCTION

After months of speculation Verizon has finally acquired Yahoo for nearly $4.83b in cash, slightly more than the $4.4b it paid for AOL just over a year ago. Notably the acquisition doesn’t include two of Yahoo’s more prized possessions: its stake in Alibaba Holding Groups and Yahoo Japan. Marissa Mayer’s four year effort to turn-around Yahoo’s fortunes has finally come to an end with the failure to show any significant signs of growth, despite multiple acquisitions, most notably the $1.1b purchase of Tumblr whose value was quickly written-off. However, like a phoenix emerging from the flames, Yahoo may emerge stronger as a result of the Verizon acquisition.

 

DETAILS AND IMPLICATIONS

Verizon has made no secret of its desire to be the global number one media technology company. The AOL acquisition was a smart means to layer more digital content, data and technology (including programmatic), and advertising opportunities on top of Verizon’s historical distribution power and data. Combined the new entity offers advertisers several benefits, most notably enhanced ID-based targeting across multiple screens and premium inventory, particularly video and mobile. The Yahoo acquisition adds more oomph to this combination in the following ways:

  • More users: 600m Yahoo mobile users will now join AOL’s existing 600m. Nobody is certain how many of these users are duplicates, so it’s likely to be less than 1.2bn unique users. Nonetheless, it should give Verizon decent reach, particularly internationally where Yahoo has retained some strength and AOL is weaker.
  • More data: AOL has made a big deal over its willingness to open up more of its data than Facebook and Google. With Yahoo, it now has over 165 billion daily data events it can exploit for advertisers.
  • More premium content: Advertisers are keen to find better, safer places to move their TV spend. Yahoo’s roster of premium content in sports, technology and finance provides an extended safe-haven of viewable, verifiable and brand safe inventory.

 

 

However, several challenges remain in implementing the strategy:

  • More targeting: While Verizon is a huge player in the USA its global footprint is weak. In order to replicate the ID-based three-screen model it will either need to acquire or partner with similar pipe-providers in other markets.
  • More competition: the Yahoo/AOL combination provides a third global mobile advertising alternative to Facebook and Google, which control roughly 43% of total the world’s digital advertising revenues. Yahoo’s 1.5% contribution hardly puts a dent in that figure but Verizon will be hoping the sum will be greater than the parts.
  • More programmatic: AOL has spent a lot of time and money building ONE, one of the industry’s best programmatic offers. It will now need to integrate Yahoo’s vast collection of assets, inventory, data and tech into the ONE platform, which must be doable but by when?  

 

SUMMARY

Yahoo, one of the oldest Internet brands and pioneers, lives on. For that, we should all rejoice. With a price tag of $5b, it’s a long way from 2000 when Yahoo was valued at $125b, or even the $44b Microsoft offered to pay for it in 2007.   Nevertheless, it is an iconic brand, in many respects similar to AOL. By bundling them together and layering in some killer targeting, data and distribution paths, Verizon hopes to give Google and Facebook a real run for their money and the industry a credible, third global mobile alternative. Yahoo! 

Apple App Store Search Ads

Joshua WIlliams

Background

Apple is launching a new search ads product for App developers allowing them to bid to appear for desirable searches using a similar model to Google’s search engine advertising platform, AdWords.  Targeting and set-up options will vary from detailed keyword and demographic targeting (although these will be more limited than Google or Facebook), to a fully automated set-up, similar to Google’s Universal App Campaigns.  With a full launch in the US slated for the autumn, Apple’s developer portal is currently offering beta opportunities to trial the ads for free over the summer.


Details and Implications

Getting an App noticed on the App store can be difficult.  You can discover it through the ‘featured’, ‘categories’ or ‘top charts’ lists but Apple suggests that 65% of app downloads in the App store are driven by searches.  Being visible here is currently reliant on publishers ensuring their app is the most relevant for the user’s search query, using many of the tactics employed in traditional SEO. With recent studies suggesting that only a third of users download new apps in an average month, Search Ads could offer a great opportunity to stand out and drive downloads.  As organic search rankings are also influenced by the number of downloads, this may be a good tactic to drive early downloads of newly launched Apps and stimulate organic visibility but there will be a number of factors to consider to achieve success:

  • The likelihood that ads appear for queries is driven by both bid and relevancy. So publishers must focus on optimising their App metadata and other elements.
  • There will be only one ad visible for searches at launch.  As such, some terms may be extremely competitive, driving up the cost to appear for these terms.
  • The ad unit is in two sizes, with the size being chosen and all information automatically being populated by the Apple system. The larger version of the ad unit will push down organic results to the extent that organic downloads may be reduced.
  • Tracking will be possible but it is unclear at present whether familiar third parties (TUNE, Appsflyer etc.) will be compatible.
  • Publishers may be forced to bid on their own App name and brand to defend against other publishers who are using ads appearing there.
  • If they try and appear in a space that is not directly relevant for their App, they will simply not be allowed.

Summary

Search ads offer publishers the opportunity to get their App discovered in an extremely competitive market.  For those with broader paid download strategies across Google and Facebook this will be another useful channel. However it also means that optimisation of the organic elements of an App has never been more important to ensure smaller independents are not priced out of the market and that user experience is still prioritised.  

Pokemon GO

Joshua WIlliams

Background

Pokémon GO has taken over the world. Reports from SimilarWeb emerged on Monday morning that the app had overtaken Tinder in Android app downloads and expected to overtake Twitter in daily active users. More surprisingly, released less than a week ago, users are spending more time in the game than on Snapchat, Instagram, and WhatsApp. Highly addictive, vigorously interactive, and fiercely nostalgic, Pokémon GO takes two key digital trends and marries them in to a game that is both changing behaviors and culture: Location (signaled via GPS) and Augmented Reality (by placing Pokémon in the world in front of you via your smartphone camera).

 

Details / Implications

Here is how you play. Go to physical locations and find Pokémon. Pokémon appear in an augmented reality (AR) format on smartphone screens, giving the appearance that the Eevee you've been chasing is actually in front of you. While the developers, Niantic Labs, actually created a similar-type of AR location-based gaming app called Ingress nearly three years ago under Google’s umbrella, it is the cultural phenomenon of Pokémon that is causing this game to get so wildly popular. Paired with the location-aware AR technology, Pokémon GO is fueling the Millennials who grew up playing and watching Pokémon to indulge in a real-life game of make-believe. Think this is an exaggeration? Take a step outside and you will spot dozens of people glued to their phone, furiously swiping to catch one of the Zubats that have infested New York, London, Sydney etc


The game represents an interesting, if not exciting, moment where our culture is seeing the first true application of AR at scale. Naysayers of virtual and augmented reality have long said that the interest simply won't be there to play games with bulky equipment, expensive investments and complex interfaces. These are valid points and surely why most people haven't invested in the first wave of VR gear. The utility for the average Joe simply doesn't outweigh the cost - at least not yet. But the incredible popularity of Pokémon GO proves that AR will become ubiquitous in modern technology, especially and most specifically with existing cultural obsessions. Pokémon GO was built on the premise of a game that was released three years ago but the familiarity of the original 150 Pokémon is so beloved to this generation that we all want to ‘catch 'em all’. And, rather than using pricey and perhaps cumbersome equipment, the game leverages the ultimate and most accessible connected device, our smartphone.

 

So what’s next for this medium? The teasers of Microsoft Hololens' interface for Minecraft and Magic Leap's secret partnership with Lucas Films to bring R2D2 in to our homes have excited us for months. Though not yet released to the public, both will undoubtedly obsess the masses if and when they become accessible using a smartphone. 

 

Summary

Nintendo’s share price has increased by 50% since Pokémon GO was released (Nintendo is an investor in game creator Niantic Labs). This is due to Pokémon GO being the best example of the growing blurring of the virtual and real world that we have been hearing about for years. While Niantic predetermines PokéStops (places of interests that drop items like Pokéballs and medicine) and Gyms (places to strengthen your Pokémon by training and fighting), brands with brick-and-mortar locations can leverage rare nearby Pokémon or PokéStops to drive increased foot traffic. You can set up a ‘Lure Module’ in all locations, which coaxes Pokémon to a PokéStop for 30 minutes, to get customers to your store or restaurant. Then, offer rewards, incentives or even discounts for players. Travel brands can create content around “Best Pokémon I Caught On My Vacation.” Brands can even create lists of “Best Places to Catch Pokémon On Your Trip” by linking travel booking with a recommendation widget for a fun additional touchpoint for customers as they book trips.  Why not drive tourism to small towns with insights into where rare Pokémon are in unassuming towns? It’s all possible in an exciting new world of AR at scale.

Snapchat Gets Selective

Joshua WIlliams

Background

News broke this week that Snapchat is consulting with advertising and publishing partners to introduce an algorithm into its Stories feed. The Stories feed is the element of Snapchat that most resembles a ‘traditional’ social platform (and is akin to the Twitter feed, or the Facebook NewsFeed). Snapchat already employs a basic ranking algorithm, by filtering content in this feed and giving a heavier weighting to content uploaded by a user’s closest acquaintances (as deemed by Snapchat). It is believed that the new algorithm Snapchat would like to introduce would develop this further by ‘scoring’ all content and then promoting popular content and demoting content with a lack of engagement.

Details & Implications

Platforms introduce algorithms in order to replace the chronological flow of content through feeds. They tend to operate as a highly sophisticated editorial filter, based on the digital signals that a user gives on the platform itself. Whilst there are usually thousands of signals, the most basic demonstration is that a platform’s algorithm will usually show you more content similar to that which you have clicked on previously.

The algorithm has been a fundamental part of the modern internet since Google launched in 1997. It’s PageRank algorithm is what drives its search engine results pages to feel so tailored to the individual. Facebook also famously introduced an algorithm that drives which content it displays on users feeds, followed a few years later by Twitter and in more recent months, Instagram.

Almost all algorithms are continually developed, often with dramatic consequences to publishers and advertisers. For example, Facebook’s NewsFeed algorithm hit the news recently over alleged censorship of right wing political content.

There are two critical implications for advertisers with regards to algorithms in news feeds:

  • As platforms that display content chronologically begin to introduce algorithms to filter content, organic and earned media will inevitably fall on those platforms – this will likely mean an increase in paid media spend on that platform.
  • Advertisers can incorporate the principles of platform algorithms into their own content creation and distribution process. By listening for the signals that users give when presented with brand content, they can learn, improve and then test new iterations – shaping content and distribution around users.

If you put people at the heart of your process, you will build a stronger relationship that allows you to communicate with them more efficiently and more frequently. Facebook, Google, Twitter, Instagram and (by the looks of it) Snapchat are proof of this.

Summary/POV

As the volume of content online continues to explode at an exponential rate, platforms will increasingly turn to algorithms (and continue to tweak existing algorithms) in order to present the user with content that is most relevant to them. What’s important for brands is to realize that in a world of increasing content noise, it has never been more critical to create content that means something to people and to put people (and data) at the heart of both the content creation and the content distribution planning process. Adapt or die. 

Gboard - Google's New Keyboard for iOS

Joshua WIlliams

Background

On May 12, 2016, Google released Gboard, a new keyboard for iOS devices. At time of writing, it is already among the top 25 free apps in the App Store, and the #1 free Utilities app. Gboard brings integrated Google searching to your keyboard, allowing you to search the web and send information without having to leave whichever app you are using. At present it is only available in the US, but is set to be introduced globally and in more languages imminently.

Details & Implications

Functionalities include the ability to:

  • Search for a restaurant address, flight information or a YouTube video and slide the content right into the message.

  • Add emojis (with suggestions as you type) and also search for and add GIFs when typing.

  • Search results are displayed horizontally and can be clicked to open in a browser or in a map if it’s a location or in Yelp if it’s a business listing (other options exist depending on

    which App you are using).

  • Search results and rankings are based on Google’s traditional mobile search algorithms,

giving you another great reason to execute sound mobile search optimization strategies.

It’s early days and Google will continue to experiment with the rankings for Gboard but we’d expect favorability for Knowledge Graph answers and News listings since Gboard use may be more likely to occur in the midst of a sharing activity (social media posting, text messaging etc).

One big difference between Google’s traditional mobile search results and initial Gboard search results is paid ad placements. For now, Gboard does not display ads. No text ads and no shopping ads as you get on the mobile web. While there is no official confirmation that ads will become part of Gboard search results in the future, Google historically adds advertising when usage reaches a critical mass.

Furthermore, the introduction of Gboard means that Google’s search results will now also be included in Spotlight search on iPhones, where Bing is the default browser.

Summary/POV

Gboard places Google’s powerful search capabilities across all apps that utilize any typing function in iOS. For consumers who choose to download and use this keyboard it eliminates the need to switch between apps when trying to copy and paste search results. Gboard further emphasizes the need to ensure your web properties are optimized for mobile search and while there are no paid listings at launch, it should be monitored closely for the day those may arrive. 

Q1 2016 Earnings Roundup

Joshua WIlliams

Background
The Q1 quarterly earnings reports are in and as usual it’s a mixed bag of winners, losers, and in-betweens. Here’s a quick overview of the usual suspects. 

Apple

So after 13 years of continuous year-over-year revenue increases, Apple missed a beat and reported a 10% decline in its first quarter revenue, reporting $50.56 billion in Q1 compared to last year’s $58.01 billion. Profits took less of a hit, with gross margin down by little over 1%, proving once again that Apple has an uncanny ability to squeeze more out if its assets even in the face of declining sales. Three arguably inevitable factors seem to be driving the decline: a 19% decline in iPhone and iPad sales as well as an economic slow-down in China, where sales went down by 26% compared to a year ago. However, as always don’t count Apple out. It’s an incredibly resilient organization with a loyal customer base and one of the strongest brands and product portfolios around. What it now needs, and will most certainly deliver at some point, is a quantum leap in its existing cash cow products, something that the most recent releases have been missing. In short, the iPhone 7 needs to have a significant wow factor, certainly something beyond the long-rumored full-display screen.

Alphabet

Alphabet’s stock slid on disappointing earnings; analysts expected quarterly revenue of $20.37b and instead got $20.26b, which is still a healthy 17% year-on-year revenue growth. Not bad for a company of Alphabet’s size and maturity. The lingering question over Alphabet is still whether its Google cash cow business of search and video will be strong enough to keep supporting all the moonshots in its Other Bets. Google’s paid search business grew by 29% year-on-year, enough volume to offset a decline of 9% in the average cost-per-click. More worryingly for Google is the EU’s continued scrutiny over potential unfair advantages the company has gained from its Android operating system. EU Competition Chief Margrethe Vestager has been relentlessly scrutinizing Google, and may yet find cause to penalize, regulate, or even force a break up of Alphabet’s increasingly closed and interlinked ecosystem.

Facebook

Facebook surpassed all expectations with a robust $5.38b in revenue, with its core advertising business growing by 57% year-on-year – a critical figure given that advertising makes up about 96% of total revenues. Facebook has built a nirvana of mobile advertising and dominates the app ecosystem with Facebook, Messenger, Instagram, and WhatsApp – all four apps with massive user bases and more importantly regular daily usage by a huge portion of those folks. And while smaller and arguably less ambitious than Alphabet, Facebook certainly appears to be more focused on its core business, with a never-ending stream of product innovations and opportunities for brands to leverage its unparalleled data and reach. With another four billion people about to come online, untapped monetization opportunities across its app portfolio, and a huge demand for more premium advertising inventory on mobile, it’s hard to see anything in the foreseeable future that will slow founder and CEO Mark Zuckerberg down. The introduction of a new class of shares will also enable Zuckerberg to sell some of his equity will still maintaining control over the business. Looks like we are stuck with Zuck for the foreseeable future, something most investors would loudly applaud.  

Twitter & Yahoo

Where to start. Twitter has yet to hit rock bottom. Once a rising star, the 300m + social network has lately become a casualty of the increasing dominance of Google and Facebook. Analysts expected Twitter to deliver $678m in quarterly revenue. The reality was closer to $600m. Average monthly active users grew at just 3% from the previous year’s quarter. Perhaps the NFL deal will help. As for Yahoo, the industry waits with bated breath to see who will step in and snap up various Yahoo assets. The most likely candidate is Verizon, who have been building out a strong three-screen, ID-based premium inventory ecosystem, most notably by acquiring AOL. While most expect the Yahoo brand to remain, very few believe CEO Marissa Mayer will be in her current position for long. Don’t feel too bad – she has a rumored severance package of $55m, enough to fund the bills for some time. 

Google Updates Its Product Listing

Joshua WIlliams

Background

As of May 16th 2016 if you sell a product that has a Global Trade Item Number (GTIN) (a digital barcode) on Google, it will be compulsory to include it in your feed, or else those items will be disapproved.

 

Details & Implications

 Many manufacturers make multiple products that are extremely similar when looked at within the product page of a website. Think of a time when you have tried to order something as simple as a TV,  it’s amazing how hard it is to work out if you are comparing the same model across different websites. The difficulty in confidently identifying products, is what makes product comparison sites difficult to build. Despite the fact Google has created relatively robust face recognition software, the company has not come close to replicating this with products, so Google has decided to progress by forcing merchants to tell it exactly what each product is.

 

Merchants must now use a standardised identifier to make sure Google can compare Golden Delicious apples to Golden Delicious apples. The introduction of GTIN (Global Trade Item Number) uniquely identifies any product that arrives in any kind of packaging – barcodes are usually digital versions of a GTIN. The GTIN is as familiar to logistics people as GRPs are to media people. They act as a common language between warehouses and companies to ensure large companies are able to efficiently transport goods from one business to another without needing someone to key the actual order details each time.

 

Google’s change ensures that it is getting access to this consistent data and can therefore innovate on top of the existing infrastructure instead of creating its own framework from scratch. If merchants do not comply with Google’s decision, their product listing ads will simply stop working and their products will not appear within Google shopping. This will obviously impact volumes for merchants, so there will be a push on their side to include the GTIN.

Summary

After receiving the updated product listing feeds, Google will have an interesting new data source – the exact products on sale from a range of merchants and the ability to compare. Therefore, Google can start ranking these merchants on how quickly they stock new products, how successful they are at keeping items in stock and how broad \ unique a range they sell. Even more interestingly they can compare the prices these merchants offer, so give a guide as to how competitively merchants price. Google can now also start looking at extending quality scores to include metrics based on what retailers sell. Furthermore, other companies will be making these standardised identifiers available on the internet, making it potentially easier for the next Kelkoo to emerge. 

Social Media Giants Enter Live Video

Joshua WIlliams

Background

Twitter and Facebook have both recently announced key partnerships and product updates around their live streaming services.

Details and Implications

A new partnership between Twitter and the NFL is bringing live Thursday Night Football to the social platform. Twitter will stream ten out of sixteen regular season games broadcast by NBC and CBS free to air to its global audience. The deal also includes in-game highlights and pre-game Periscope broadcasts from players and teams.

The deal, which reportedly cost $10M, is not entirely exclusive as the games are simulcast on the NFL Network and are accessible on the NFL’s Mobile app via Verizon, in addition to being aired on network television. This makes for an increasingly fragmented and potentially confusing way for NFL fans to watch their favourite teams. The most obvious beneficiaries of this deal are NFL diehards abroad who can’t watch the game anywhere else, but given the myriad of ways a user can watch NFL online (via subscription services in selected markets) Twitter’s live stream needs to be both seamless and high quality to compete in this crowded marketplace.

 

Not to be outdone, Facebook, which recently hosted its most watched video to date with Buzzfeed’s exploding watermelon experiment (which had more views than a Conan show on TBS), recently signed deals with content producers including New York Times, Tastemade and Buzzfeed to produce a hundred live videos each month. Facebook is also making it easier to view live content by rolling out a dedicated live video tab on mobile, which will include different sections for live broadcasts around the world as well as live stories from your friends and Pages you follow. Facebook has also updated its algorithm to favour live videos as they are viewed 3x longer and have 10x more comments that non-live videos. 

 

Summary/ POV

Facebook and Twitter are already everyone’s favourite second screen and as major social networks double down on live video streaming publishers and brands have additional opportunities to create more interactive video experiences to have deeper engagement with their audiences.

 

However, it is still unclear if viewers are willing to watch long form content, e.g. a three-hour football game on their mobile devices. While Facebook has improved its live video experience, Twitter has yet to disclose how its live stream will work. Can users still see their timeline? How easily can users toggle between apps while watching the stream? For many, three hours is a long time to be doing just one thing on your phone. Sports is also a social activity and watching it on a tiny screen makes it less so. Twitter can solve both issues if it follows the Periscope model and integrates real-time, relevant tweets from sports commentators and friends and allows the user to participate in the conversation in real-time without interrupting the stream.

 

Both platforms have yet to announce what the advertising opportunities are but this could be a game changer for marketers who specifically want to reach NFL viewers and other major live events like awards shows. Twitter and Facebook’s people based targeting is significantly more accurate and real-time than any broadcast buys allowing advertisers to tailor creative in a number of ways, reaching the right person, at the right time, with the right message. If the live streams are high quality and user experience is seamless, this could hasten the movement of “TV media dollars” to social media, which is what they really want.

F8 Conference 2016

Joshua WIlliams

Background:

This week, a mix of marketers, developers and thought leaders descended upon the San Francisco waterfront to hear what’s next and noteworthy from Facebook.  While the announcements ranged from the here and now (Messenger and Live Video) to the future-forward (VR, AR and lasers), central to each announcement were these common Facebook pillars:

·       Consumer-first

·       Utility at every touch-point

·       Deeper experiences to enable more connected world

 

Details and Implications:

   Messenger: Messenger was the fastest growing app last year, with over 900MM Monthly Active users worldwide and over 60 billion messages sent dailyFacebook will invest more in the channel this year to create a hybrid communication/service portal.  While Facebook spent most of last year testing services such as live chat, ride sharing, and order receipts, we anticipate that their opening up the channel to bots will enable deeper in-messenger experiences with implications for travel, ecommerce, and content distribution.

Right now, businesses can use Messenger as a community management or customer service channel; however, direct-to-consumer brands should consider how Messenger could compliment their current omni-channel strategies.  Facebook is testing paid ads in Messenger; while it could be a tactic to reach customers in an intimate, mobile-first environment, it will still be paramount for brands to bring utility and a true value exchange to the platform.

 

   Video:  A major player in the consumption and sharing of video content, Facebook announced a few video updates to enable users to have deeper and more immersive experiences on the platform: Live and 360-degree video. Facebook will launch a new tab to enable the discovery and cataloging of live video, in addition to new tools to make Live Video more engaging.  For brands, Live Video can enhance tactics such as tentpole events, influencer partnerships, and corporate keynotes.  For deeper storytelling and to foster content creation, Facebook also announced new hardware for the capture of 360-degree video, the Surround 360. These types of videos can be used in scenarios where surround-sound storytelling can deepen brand messaging and for live events with clear implications for the entertainment and travel industries.

 

   Deeper Publisher Engagement: Building on the first bullets, F8 underscored Facebook’s partnerships with the publisher community.  From enabling content distribution in Messenger to Live Video, Facebook is providing new avenues for users to interact with their favorite media properties such as Buzzfeed, CNN, and Tastemade.  Instant Articles, another tool in the publisher toolkit, is a seamless way for people to digest, share, and engage with longer form content in the Facebook environment. It also provides ample opportunities for brands, from creating sponsored editorial to running surround media (i.e. banners and video).  These new tactics are excellent ways to borrow equity from relevant publishers and drive contextual relevancy for brands. From live game shows to curated messenger content, expect publishers to bring new Facebook-driven syndication and integration programs to the marketplace.

 

Summary/ POV

F8 demonstrated Facebook’s commitment to fostering connectivity.  While the implications of the platform’s long-term goals in regards to VR, AI, etc. are unknown for brands, there are tactics we should consider now to drive deeper connections.  While the offerings are new, the big questions remain the same for marketers: how will they use these new channels for scale, utility, and the ever-important value exchange?

Facebook: Capturing Attention With Captions

Joshua WIlliams

Background

Facebook recently introduced automated captioning for sound-off video ads in its newsfeed. This service is available only in the US and Canada for ads in US English at present, but is set to be introduced globally imminently. In addition to the captions advertisers are already permitted to add, advertisers will now be able to automatically review and adapt the captions generated by Facebook, or simply allow Facebook to check the text as part of its review service.  

 

Details and Implications

With the exponential growth of mobile in recent years more content is being consumed on the go than ever before. However, according to research conducted by Facebook, 80% of people react negatively to loud videos automatically playing in their newsfeed, ultimately blaming the brand as well as the platform. Furthermore, an alarming 41% of videos inevitably prove impossible to understand when the sound is omitted.

 

This new update will not only see Facebook offering an automatic captioning service, but serving metrics to brands to indicate the exact percentage of users who actually watched their video ads with the sound off. Facebook is also actively encouraging brands to make their videos more visually appealing, especially as recent research indicates that around 65% of people who watch the first 3 seconds of a video watch at least 10 seconds of it.

 

For Facebook, the use of captioning is a further push to entice users to engage with content in its newsfeed and of course further monetize its video advertising product. The initial tests have inferred positive results, with captioning producing a 12% increase in average view time. This uplift should be especially apparent for video consumed on mobile as users usually rapidly scroll down their newsfeed.

 

For brands and advertisers this update presents an exciting opportunity to target users in a more diverse range of settings, as videos will possess a much greater chance of being viewed in previously noisy environments, such as shops and public transport. Content is still king, but now more than ever it should be relevant either with or without sound. Furthermore, videos with a strong call to action should also be utilized more frequently by brands.

 

Summary/ POV

Although the addition of captioning is a relatively innocuous update, the repercussions for brands and advertisers could prove to be great. The need to create content that is truly immersive, captivating and adaptive is more important than ever before. Brands should now consider not only device type but also the potential location and format videos could be viewed in.  For Facebook it’s all about evolving its ad offering to continue to be both beneficial to its users and advertisers.

Ad Blocking Update

Joshua WIlliams

Background

A group of key stakeholders from the World Federation of Advertisers, the World Economic Forum and the Interactive Advertising Bureau Europe met in London recently with other key stakeholders -- advertisers, agencies, consumer groups, publishers and a government representative - and issued a four point plan on how to improve digital advertising as ad blocking, intrusive tracking, and poor metrics continue to be an issue. Anti-ad-blocking firm PageFair put together the meeting. 

 

 

Details and Implications

Ad blockers allow consumers to access content for ‘free’ by stripping out the ads.  The way ad blockers generate revenue is by selling data that they gather from your device, charging consumers to use the service or by allowing ads to pass through their blocker based on a fee that a publisher splits with the ad blocker based on what is delivered to the end user.  Although ad blocking is larger on desktop, it will grow on mobile, especially among millennial males.

 

There are many reasons why people choose to use an ad blocker, from speeding up page load time to eliminating intrusive and poorly created ads. Regardless of the reason, ad blocking is not going away and the industry needs to do a better job at delivering relevant brand experiences to consumers on mobile and desktop screens. 

 

All parties at the meeting agreed on four main points:

 A user must have immediate tools to reject and complain about advertising

  1. A limited number of premium advertising slots should be displayed
  2. Contextual targeting should be increased to end over reliance on behavioural tracking
  3. Better metrics of advertising success are needed to improve online advertising

Summary/ POV

The holy grail for advertisers is to deliver relevant messages that are not intrusive and that provide consumers a value exchange in the form of content, offers, access and utility that helps them in their daily lives. It is not about just delivering a coupon or awarding additional levels in a game and the brand must give consumers easy access to determine if they want to continue and receive messages.

 

Think of it like this, in your social feeds you receive recommendations to follow people you may know or share similar interests and you can easily choose to follow or reject that individual. This approach could be cascaded into the world of advertising.

 

Limiting the number of ads, especially annoying ones, is critical in mobile as the screen is small and personal. Mobile messages can be powerful if deployed at moments that are relevant and the ability for a brand to own quality content at scale in this way is vital to the health of mobile advertising. 

 

Yes behavioural and retargeting works, it drives metrics, but it also can be deemed too intrusive. In comparison dynamic ads based on content and location can help drive relevancy in a non-intrusive way.

 

Although the four points were broadly agreed upon, it will mean nothing if action is not taken.

 

Apple "Let Us Loop You In" Announcement

Joshua WIlliams

Apple-Tim-Cook.jpg

 Background

Apple hosted its “Let Us Loop You In” event on March 21. While announcements were generally considered lacklustre compared to previous years, there are implications for both consumers and brands.

 

Announcements

Most changes focused on welfare through innovation and the event started with a discussion on the company’s stance that innovation starts with sustainability. Apple then unveiled LIAM, a robot that deconstructs old iPhones to redistribute and reintroduce the parts into global supply. Apple also announced the launch of CareKit SDK, a build on ResearchKit SDK launched last year, which allowed developers to build apps that gather medical research. The open source framework of CareKit SDK will allow the development of apps to give people more of an active role in their healthcare – offering such services as having customized care sent directly to their smartphones from their physicians, dynamically updated based on their health data.

 

Other wellbeing-focused product developments include Night Shift, which uses geo-location and clock data to infer if a user is settling down for the evening. Studies have shown that blue lights from phones stop you getting a good night of sleep, so Apple has developed Night Shift to automatically shift screen colours to lean towards warm tones. A similar application, True Tone, available in the new iPad Pro, adjusts the tablet’s display to match your surroundings’ colour to make screen viewing more natural.

 

Finally, Apple has been riding the “bigger-is-better” wave in past years (the original iPhone had a 3.5 inch display, the 6s Plus is 5.5 inches) but is now launching the iPhone SE, which has a 4-inch screen. With the inevitable launch of the bigger-than-before iPhone 7 later this year, Apple is now adopting a dual approach to size and providing another entry point into the iPhone ecosystem for those who want a small and cheaper phone, presumably to be upsold to bigger and more expensive models later.

 

Implications

Apple’s new developments in its software and iOS continue to root the brand in superb user experience. Night Shift and True Tone, small visual changes to user experience, will make viewing brand ads and experiences feel more natural.

Larger screens have created an ideal canvas for brand storytelling and the iPhone 6s and 6s Plus have helped increase popularity for immersive content, like 360 degree and VR video. The smaller screen of the iPhone SE will challenge advertisers to find ways to drive experiences with smaller screens.

SXSW Interactive 2016

Joshua WIlliams

Background:
Every March, thousands of people flock to Austin, Texas for SXSW Interactive—an incubator of cutting-edge technologies and digital creativity, featuring five days of compelling panels, presentations, brand activations and more. Some of this year’s key themes and takeaways for marketers included:

A New Generation of Influence: The focus for marketers is shifting from Millennials to Generation Z. This mobile-native generation is on the cusp of entering the workforce but still has a strong influence on the purchasing power of Gen X and Millennial parents. Gen Z is vastly different from its predecessors – for them, gender standards barely exist and categories and labels are meaningless. They’re twice as likely to use YouTube versus Millennials; they’re also more likely to shop online and have an attention span that’s almost 50% shorter. To them, media and communications is all about immediacy, authenticity and privacy.

The Virtual World: One of the biggest focal points at SXSWi was virtual reality. On top of numerous panels, it was almost impossible to find a brand-sponsored lounge or party that didn’t have a VR headset. While there’s still a lot of challenges ahead regarding scale and adoption, many at SXSWi were bullish about VR’s potential for storytelling and audience engagement. For example, consider a VR cycling experience—it takes a lot of self-discipline to exercise, but VR can help people more easily escape the mindset of pain and boredom and submerge into another world. There’s also an opportunity to deliver empathy: you can enable users to virtually ‘walk a mile in someone else’s shoes,’ by showing people the hardships of refugees and poverty.

Some at SXSWi predicted VR as the main computer screen of the future. If this becomes true, then imagine a generation where having an online vs. offline experience might be a foreign concept. Will social networks like Facebook just become a virtual club for your friends to hang out in?

Robots vs. Humans: IBM introduced SXSWi to Pepper, the first social humanoid robot capable of understanding and reacting to human emotions; he listens and adapts to your preferences the longer you’re with him. Pepper is being tested in Japan now, with a key focus on benefits for the healthcare, retail and hospitality industries. He could be particularly useful for tasks with little room for human error—like providing pills at a regulated time each day.

In 50 years, there will likely be nothing a human can do that a robot can’t. But while a robot that vacuums your house is easy to adopt, one that cooks you dinner or minds your baby is much harder to grasp. Robots are fueled by big data—but will the human race be able to trust this data and the robot’s ability to perform such tasks?

Future of Retail. The future of shopping is about online-offline integration. For example, the commercialization of AR apps can enable brands to link offline media (like print) to a digital experience. Moreover, products must deliver some sense of ceremony beyond pure function and even the shopping experience must delivery utility rather than being merely a concept space. That blending of qualities is key in e-commerce; brands must embrace the convergence of both content and commerce in order to appeal to the increasingly demanding consumer.

A lot of the SXSWi tech showed potential for retail, from VR to 3D printing to the Internet of Things. AI in particular is interesting—it’s becoming advanced enough that AI recommendations and anticipation of needs are starting to feel very human and natural. Thanks to data application, the suggestions made around clothing, food, music and travel spots you might like, continue to improve, moving us from human curation to machine learning solutions.

Evolution of Language: Emoji usage has exploded in the past couple years, providing users with an efficient means of expressing emotion online. Studying emoji patterns is quickly becoming a cultural mirror into different regions of the world. A session investigating the linguistic trends of emoji usage posed the question of whether our language is becoming more like the hieroglyphs seen in ancient Egypt. Will our language eventually evolve (or devolve) to just using emojis/gifs for digital communication?

3D Printing: Last but not least, it turns out that 3D printed food tastes pretty good. And fun aside, it’s gaining purpose for people dealing with health obstacles or food allergies, be it in the military, space, hospitals and more. Computers can print out the food that modern chefs just can’t cook up for people in need.

For more insights on these topics, check out more SXSWi recaps from Alexandra Spaseff, Ann Kelsey, Chrissie Hanson, Elliot Nam, Emma Witkowski, Jason Maggs, and Kristin Hogan here and here.

Mobile World Congress 2016

Joshua WIlliams

Background:

Last week, 100k+ people descended on Barcelona for the annual Mobile World Congress. Exhibitors included device manufacturers who use the event to launch flagship devices, companies providing the hardware inside phones, businesses working in the Internet of Things (IoT) space and mobile media and ad tech businesses. The 3 main themes of this year’s conference were: the rise of virtual reality, the increase in connected objects and ad blocking on mobile.

 

Details and Implications:

The rise of virtual reality: As an industry worth an estimated $70bn by 2022, VR took centre stage at MWC. Samsung and Mark Zuckerberg announced the new Samsung Gear VR will be powered in part by Oculus. The Gear VR will ship free with pre orders of the Galaxy 7S and 7S Edge devices. Zuckerberg envisages a world where VR will power everything from gaming to films, conference calls and social networking. He also announced a new "Social VR team" that will focus entirely on exploring the future of social interaction in VR. Samsung and Facebook weren’t the only companies showcasing VR at the conference. HTC demonstrated the Vive VR headset and LG also launched its LG 360 VR headset.

 

Connected objects, connected lives: The Internet of Things revolution is gaining momentum. Many of the consumer electronics brands were demonstrating smart home devices such as Sony’s Experia Agent prototype – a smart home hub designed to take on the Amazon Echo. Many of the innovations in the Internet of Things arena came from businesses developing infrastructure needed to connect IoT tech together. Ericsson showcased networks built specifically to facilitate machine to machine communications. Alcatel-Lucent, Sigfox, and Aeris were also showcasing this technology that will in part be powered by new 5G network technology, which itself will be rolled out in phases over the next 4 years.

 

Ad blocking causes friction at the conference: The rise of mobile ad blocking is such a hot topic that ad blocking companies like Shine exhibited at the event and clashed with Google and Yahoo. The focus of the adblocking provider’s presence was how they monetize their service. Shine works directly with mobile networks while Adblock Plus charges businesses a premium for access. While network-level ad blocking is a great consumer-side play, it shouldn’t worry advertisers who will increasingly be the primary source of revenue for networks.

 

Summary/ POV

Although the conference was underpinned by concerns surrounding data privacy and poor user experience, innovations in the VR and IoT spaces show that we are past the point of these devices being gimmicks. They now offer ways of communicating and consuming media for users and represent new advertising channels for our clients. 

Beacons are lighting up for Google

Joshua WIlliams

Background

Last week, Google announced that it will be supporting physical beacons in its Chrome browser for Android. Beacons are now becoming a reality after a long hype period. Retail giant Target rolling them out in 2,000 of its US stores and WPP-owned OOH agency Kinetic partnering with Exterion Media to install beacons across the UK’s transport networks and in major shopping malls.

 

Details and Implications

Beacons have always appeared to be an attractive way to communicate with consumers via mobile, but the ability to scale beacon solutions has really prevented them from taking off. Most current uses of beacons rely on an Android and/or iOS app detecting them with push notifications turned on and as 85% of consumers tend to only use 5 apps, the experience becomes diluted quickly. However, Google’s next version of Chrome for Android, version 49 (currently in beta) cuts out the need for users to have an app downloaded and for brands to have a high app user base. The new Chrome will be able to alert users to low-energy beacons near to them. The idea is for people to be able walk up to any "smartened" device without having to download an app first.

 

Google are calling this ‘The Physical Web’, a nod towards the blurring of lines between the physical and digital world. The first time a user comes into contact with a beacon they receive a notification through Chrome asking if they want to enable The Physical Web. If activated, users will then see notifications that list which nearby beacons are available, including URLs to be clicked on to visit a linked webpage. This means consumers can receive information, offers and exclusives from all types of companies when on the move. For example, airlines can send pop-up alerts on departure information, or you could receive a notification from a shop, which now has your size back in stock, or you could receive vouchers when walking past your favourite store.

 

It’s clear that Google is thinking about how to take beacons to the next level by rolling them into the wider world of smart devices. Google wants to ensure beacons are integrated into the Internet of Things and don’t operate as a standalone entity but rather help facilitate the world of connected devices. Scott Jenson, Google, said: “There will be millions of smart devices in our homes, work, and everywhere in between. Accessing functionality from these devices will be just like using the Web. You wake up, tap, and go.”

 

Summary

 Location based signals are playing a pivotal role in connecting the physical and digital world. Location targeting combined with consumer relevancy has never been more important for brands looking to drive consumers to the point of transaction through media. Google’s decision to support beacons with Chrome for Android reemphasises the vital role of proximity marketing. As beacon technology evolves, it’s also important to consider how it can deliver in relation to omnichannel, personalised experiences for consumers.

 

Will Verizon Rescue Yahoo?

Joshua WIlliams

Background

Last week, US mobile company Verizon said it is interested in purchasing some or all of Yahoo. With more than 112 million wireless subscribers, it is looking to add Yahoo’s more than 1 billion e- mail, finance, sports and video users to AOL’s 2 million users, in an attempt to secure a foothold in digital advertising against YouTube and Facebook.

Details and Implications

Verizon’s success or failure will depend on the size and accuracy of its identity graph – the volume of single user IDs that it can apply to the eyeballs across its properties. Facebook and Google have built strong identity graphs that are modeled on a large set of deterministic data (email address to log into an app on mobile or desktop) to enable them to identify Single Users across multiple devices. Verizon is sitting on an incredibly powerful deterministic set of data to rival, or even exceed, that of Facebook and Google in terms of richness - 112 M subscribers and their physical address, email, mobile number and home phone numbers (visibility on web browsing, interest data, mobile app usage) – that is an extraordinary amount of information they hold at a single ID level.

Though the details aren't clear, Verizon would be able to match its own data on individual consumers with identifiable data held by Yahoo and AOL, all of which likely will be hashed or encrypted in order to remove personally-identifiable information, but remain linked through anonymized IDs. Verizon’s deterministic data set is largely US based but it can drive scale in other markets by using the learnings from this set to validate probabilistic modeling. This will allow AOL and Yahoo to aim ads at what it believes to be the same person on the desktop, in mobile and via addressable television in the UK and further afield.

Summary

It is the data (identity graph) that is the differentiator in today’s digital advertising landscape. The ability to target and serve meaningful content at a single ID level is an incredibly compelling proposition for advertisers and is one they have come to expect with the likes of Facebook and Google. Verizon has used its privilege as an ISP to collect an incredibly powerful data set that it puts at the heart of its business. It is this data set that enables Verizon to buy and resurrect the likes of Yahoo and AOL.